Tuesday, February 11, 2003
As an attorney for the poor with an interest in taxation, I feel obligated to link to this column by Molly Ivins detailing how the IRS is tougher on the poor than on the rich.
What I think she gets wrong is her claim that conservatives want to eliminate the individual income tax. Some may propose that in theory, but if you look at all of their priorities and arguments, that is not where they are going. Look at their actual proposals:
*Eliminate the Spoiled Brat Tax (aka the Estate tax, only applicable to millionaires).
*Eliminate the corporate income tax because it is �double taxation� to charge an extra tax on fictional, government-created entities that have special legal privileges that actual, flesh & blood citizens do not have.
*Eliminate taxes on dividends because it encourages companies to retain earnings and, well, invest in the economy and hire people, etc. Plus, it is also double taxation, because of the existence of the corporate tax. (See how that works? Problem? Earnings are taxed twice: Once in the corporation, and once as dividends. Solution? Eliminate both taxes. No more double taxation.)
*Eliminate the capital gains tax to encourage investment. This will become an imperative after they have eliminated the dividends tax, since corporations will have less of an incentive to keep money to invest.
*Eliminate all other investment taxes. Well, okay, I have only heard that one actually proposed by Steve Forbes, but what is important for my thesis is that this seems to be priority over killing the individual income tax completely. Plus all of the other, �more serious� proposals seem to be heading in that direction.
If the conservatives achieved all of the above, what would be left of the individual income tax? It would become a wage tax. At that point, would they continue the crusade to end the individual income tax and replace it with a value-added tax? I doubt it. Sure some zealots who don�t actually hold office or donate to campaigns might continue the fight, but I think they would become as ostracized as conservatives who still believe in balancing the budget. Most Republican voters who actually work for a living tend to vote on social issues like banning abortions, ending affirmative action, and teaching creationism in science classes. The rich enjoy spending their money. If only the little people who work for a living are paying taxes, why should they end that and tax shopping?
A government financed entirely from a wage tax. That is my prediction of where the Republicans are headed.